Question 1

The contract signed by XYZ Ltd.and Charles provided that the company would receive a licence to use the computer program that Charles was creating,that Charles would complete the program by January 15,2012,that Charles would retain copyright,and that Charles would receive $10 000 on completion of his work.Two weeks before the due date,Charles told the president of the company that he was not going to complete on time.The president said,"Don't worry about it; get it done as soon as you can." Charles was 10 days late in completing the work.The delay caused the company to lose money,so it sued Charles for damages.On these facts (which you should assume can be proved),which of the following is false?
A) The company has the right to sue even though it is not a natural person.
B) If this case were heard in the B.C. Supreme Court, the judge would have to follow a precedent on the point set by the B.C. Court of Appeal.
C) Charles could enter his defence and could also enter a counterclaim if he felt he had an action against the company.
D) Charles could use equitable (promissory) estoppel as a defence.
E) The company doesn't have the right to sue because the law would presume that the parties did not intend to be legally bound.

Accepted Answer

This statement is false because the contract between XYZ Ltd. and Charles clearly outlines the terms of their agreement, including the payment of $10,000 upon completion of the work and the granting of a license to use the computer program. Therefore, it is unlikely that the law would presume that the parties did not intend to be legally bound. The company has the right to sue Charles for damages resulting from his breach of contract.

A) is true because a company is a legal entity capable of entering into contracts and being sued.

B) is irrelevant to the facts of the case and cannot be determined from the information given.

C) is true because Charles has the right to defend himself against the company's claims and may also be able to make a counterclaim if he feels he has a legal action against the company.

D) is a possible defence for Charles, but it cannot be determined from the facts given whether he would be successful in using this defence.

Question 2

Which of the following agreements has to be in writing under the original Statute of Frauds in order to be enforceable?
A) an agreement to sell a car on January 1 of the following year
B) an agreement by a creditor to accept $800 in full satisfaction of a debt in the amount of $1000
C) a lease of a vehicle for a term commencing on November 1, 2011, and expiring November 1, 2013
D) an agreement for the sale of a farm animal
E) an agreement for the sale of a building lot

Accepted Answer

The answer of Which of the following agreements has to...

Question 3

In Ascent Financial Services Ltd.v.Blythman,the Court decided
A) that Anna and Art were in breach of both the sale of goodwill agreement and the non-competition agreement, as well as their fiduciary duty.
B) that Carolyn and Don were in breach of both the sale of goodwill agreement and the non-competition agreement, as well as their fiduciary duty.
C) that Carolyn and Don were in breach of only their fiduciary duty.
D) that Anna and Art were in neither in breach of the sale of goodwill agreement nor the non-competition agreement.
E) that Anna only and not Art was in breach of her fiduciary duty.

Accepted Answer

The Court found that Anna and Art were in breach of both the sale of goodwill agreement and the non-competition agreement, as well as their fiduciary duty.

Question 4

Negotiations between Dave and Mary resulted in the following agreement: Dave would sell his property to Mary for the sum of $150 000,closing date to be August 10,2011.When the two completed their discussion,Mary paid Dave $5000 as part payment of the purchase price and received a receipt.The contract was not in writing.On August 10,Mary tendered the remainder of the money,but Dave refused to convey the property.Mary sued Dave for breach of contract.On these facts which of the following is true? (Assume all facts can be proved.)
A) Mary cannot enforce this contract because the contract was not in writing.
B) Mary cannot enforce this contract because the contract was not evidenced in writing.
C) Mary can enforce this contract if the receipt specified the part payment was for the property in question.
D) Mary cannot enforce the agreement because all of the consideration was not paid.
E) Mary cannot enforce the agreement because she had not paid Dave all of the money.

Accepted Answer

Mary can enforce this contract if the receipt specified the part payment was for the property in question. According to the Statute of Frauds, contracts for the sale of land must be in writing to be enforceable. However, in this case, Mary made a partial payment of $5000 and received a receipt for it. If the receipt specified that the payment was for the property in question, it would act as written evidence of the contract and Mary would be able to enforce it in court. The fact that the contract was not in writing is not necessarily fatal to Mary's case, as long as there is some evidence of the agreement.

Question 5

In which of the following situations would the contract relating to land not be enforceable?
A) an unwritten agreement to have a garage built on the land
B) an unwritten sale of land where the seller allowed the buyer to to enter of the property and commence construction thereon
C) an unwritten lease for a term of five years
D) an unwritten lease of a lawn mower used to maintain the land
E) an unwritten sale of land but where the sale was acknowledged in subsequent correspondence, signed by the party denying the existence of the sale

Accepted Answer

An unwritten lease for a term of five years is not enforceable because leases over one year must be in writing to satisfy the Statute of Frauds.

Question 6

Sue had a beautiful lakeside cottage that had been in her family for years.Times became a little tight,and Sue decided she had no choice but to sell the property.Sue agreed to sell the cottage property to her neighbour Bob for the sum of $250 000.Although Sue was ecstatic about the price early on,she soon changed her mind.There were too many memories for her to give the property up.Which of the following,by itself,would be the biggest barrier to Bob enforcing the agreement?
A) Unknown to Bob, at the time of the agreement Sue was mentally incapacitated.
B) The $250 000 price was not adequate, under the circumstances.
C) Bob and Sue had an agreement that their contract was not to be enforceable.
D) Although Sue had written a letter to Bob that discussed the essential terms of the agreement, Bob and Sue had not executed a written agreement.
E) No money had yet exchanged hands.

Accepted Answer

The answer of Sue had a beautiful lakeside cottage that...

Question 7

(Modify this question for your jurisdiction.)Bill,a college graduate,rented office space under a two-year lease.He needed the space because he contracted with the provincial government to create a program to integrate the various inventories of different government agencies.Bill hired Janet and Fred as full-time programmers for one year.He bought three desks for cash.He bought a $2000 laser printer,for which his dad signed as a guarantor.He bought another computer from a different seller under a conditional sales contract.Which of these contracts should be evidenced in writing to be enforceable?
A) the contract with the government, because it will take more than a year to complete
B) the employment contracts
C) the contracts for the desks
D) his dad's guarantee
E) the lease

Accepted Answer

The answer of (Modify this question for your jurisdiction.)Bill,a college...

Question 8

Joe saw an ad in a paper for the sale of a house in a residential area of Victoria.He approached Sam,the owner,and after some negotiation Sam orally agreed to sell the house to Joe for $50 000.Joe gave Sam $10 000 cash as a partial payment,the rest to be given upon transfer of the house.Two days later,Sam changed his mind and sent Joe a letter referring to the deal and stating that he would not honour the agreement.Which of the following is correct with respect to the legal position of the parties? Assume all the facts can be proved.
A) Sam is not bound by the agreement as the contract was not in writing.
B) Sam will not be bound because no oral agreement is ever enforceable.
C) Even if the letter gives evidence of the deal in writing, it cannot satisfy the requirement of writing. It is the whole contract that must be in writing.
D) If the letter mentions the important terms (such as price) and identifies the specific property, Sam must go through with the contract.
E) The contract is void unless it has been partially performed.

Accepted Answer

In some cases, contracts can be enforced even if they are not in writing, such as in the case of an oral agreement for the sale of property. However, the Statute of Frauds requires that certain contracts, including contracts for the sale of real estate, be in writing to be enforceable. Sam's letter referring to the deal may satisfy the writing requirement if it includes the important terms of the contract, such as the price and the specific property. Therefore, Sam may be bound by the agreement despite the lack of a written contract, as long as the letter satisfies the requirements of the Statute of Frauds.

Question 9

What does the decision in Bayview Credit Union Ltd.v.Daigle illustrate?
A) Businesspeople are at a risk when dealing with minors as if they were adults.
B) Parents are responsible for contracts made by their children.
C) Contracts made by children are void.
D) When a minor enters into a contract, there is no consideration.
E) A person under the age of majority cannot intend to enter into a contract.

Accepted Answer

The decision in Bayview Credit Union Ltd. v. Daigle illustrates that businesspeople are at risk when dealing with minors as if they were adults, as minors have the ability to void contracts.

Question 10

In Royal Bank of Canada v.Holoboff,the Bank sued Holoboff,a minor,who had sold his client card and personal identification number (PIN)to a third party who defrauded the bank.What was the result?
A) Holoboff was found liable for the tort of conspiracy to commit fraud.
B) Holoboff was found liable for breach of contract, despite being a minor.
C) Holoboff was not liable for anything, as minors can never be liable.
D) Holoboff's parents were automatically liable for Holoboff's tort.
E) Holoboff's parents were automatically liable for Holoboff's breach of contract.

Accepted Answer

The answer of In Royal Bank of Canada v.Holoboff,the Bank...

Question 11

Which one of the following is required to be evidenced in writing under the Statute of Frauds or its equivalent?
A) a contract of employment
B) a contract to incur debt
C) a guarantee
D) any contract involving money over $1000
E) any contract involving goods

Accepted Answer

A guarantee, which is a promise to answer for the debt or default of another, typically needs to be in writing under the Statute of Frauds.

Question 12

A woman forged her husband's signature on dozens of cheques.In an attempt to protect her from prosecution,the husband signed a letter prepared by the Bank agreeing to assume all liability for the forged cheques.What would the Court find in relation to this agreement?
A) As an agreement to stifle a criminal prosecution, it was an illegal contract and therefore void.
B) The agreement was unenforceable because the Bank lacked capacity to enter into such an agreement.
C) The agreement was unenforceable because the husband was under duress at the time he signed it.
D) While the Bank acted improperly, "freedom to contract" establishes that the agreement must be enforced.
E) Because the husband acted improperly, the agreement was voidable by the Bank on the basis of illegality.

Accepted Answer

The agreement to assume all liability for the forged cheques was an illegal contract, as it was an attempt to stifle a criminal prosecution. Such agreements are against public policy, and therefore void.

Question 13

In the classic case of Carlill v.Carbolic Smoke Ball Company,the defendants manufactured a product they claimed would protect against influenza.The company advertised that it would pay a specific sum of money to anyone who contracted influenza while using their product,and put money on deposit to demonstrate their sincerity.When Mrs.Carlill claimed the money,the company argued that these statements were not intended to be taken seriously.What did the Court decide?
A) There was intention because a reasonable person would have thought that the advertisement was serious.
B) There was intention because Mrs. Carlill took the advertisement seriously.
C) There was no intention because the claims made by the company were not put into a standard form agreement.
D) There was no intention because the company did not intend for the statements to be taken seriously.
E) Intention is irrelevant to whether or not a contract is valid.

Accepted Answer

The Court decided that there was intention because a reasonable person would have thought that the advertisement was serious, and the company had put money on deposit to demonstrate their sincerity. Mrs. Carlill's taking the advertisement seriously was seen as evidence of the seriousness of the offer, but not the sole determining factor.

Question 14

In Transport North American Express Inc.v.New Solutions Financial Corp.,various payments were found to be "interest" within the meaning of section 347 of the Criminal Code.The interest rate applied was illegal.The Supreme Court applied "notional severance," resulting in a reduction of the interest rate.The Supreme Court of Canada outlined four factors to consider when deciding whether to declare an illegal contract void,or to partially enforce it.Which of the following is not one of those factors?
A) whether the contract was a standard form agreement
B) whether the purpose or policy of section 347 would be subverted by severance
C) whether the parties entered into the agreement for an illegal purpose or with an illegal intention
D) the relative bargaining positions of the parties and their conduct in reaching the agreement
E) whether the debtor would be given an unjustified windfall

Accepted Answer

The four factors outlined by the Supreme Court of Canada when deciding whether to declare an illegal contract void or partially enforce it are: whether section 347 would be violated by enforcement or not; whether the illegality was based on fraud, illegality or public policy; whether severance would result in an equitable result between the parties; and whether the parties entered into the agreement for an illegal purpose or with an illegal intention. The option A, whether the contract was a standard form agreement, is not one of these factors.

Question 15

The case of Canadian Imperial Bank of Commerce v.Milhomens examined the effect of one party's insanity on a contract.What did the Court find?
A) For a contract to be voidable because of insanity, one party must be insane and the other party must have known (or ought to have known) of the insanity.
B) If a person has the mental faculties to sign a contract, that person cannot be insane.
C) If a insane person enters into a contract, that contract is automatically void.
D) Contracts are not enforceable by either party if one party can establish a mental defect.
E) The relevant test for insanity is simply whether one party believed the other to be insane, at the moment the offer was made.

Accepted Answer

The court found that for a contract to be voidable because of insanity, one party must be insane and the other party must have known (or ought to have known) of the insanity. This means that both the presence of insanity and the knowledge of it by the other party are necessary for the contract to be affected.

Question 16

Mr.Buyer,the plaintiff in the action,was attempting to enforce a contract in which the defendant,Mr.Seller agreed to sell to buyer his property,Blackacre,for $100 000.Which of the following,by itself,would be sufficient to allow Mr.Seller to get out of the contract?
A) The $100 000 was not enough, not fair.
B) At the time of the contract, unknown to Mr. Buyer, Mr. Seller did not understand the quality and nature of this act because of mental incapacity.
C) Although there was a letter from Mr. Seller referring to its essential terms , the contract itself was not in writing.
D) Although both parties agreed to this, there had not actually been any money paid on the contract, not even a deposit or a down payment.
E) The parties clearly stated that they did not want the agreement to be legally binding.

Accepted Answer

The answer of Mr.Buyer,the plaintiff in the action,was attempting to...

Question 17

Given the provisions of the Statute of Frauds,which of the following contracts should be evidenced in writing?
A) a sale of goods involving $4
B) a retainer with a lawyer
C) an employment contract
D) a sale of land
E) domestic agreements

Accepted Answer

The Statute of Frauds requires that contracts for the sale of land be evidenced in writing.

Question 18

Which of the following best describes an illegal contract?
A) a contract that is illegal at the time it was formed
B) a contract that is illegal in the way in which it was performed
C) a contract that has been breached by one of the parties
D) a contract that lacks consensus, consideration, capacity and intention
E) a contract that results in civil litigation

Accepted Answer

An illegal contract is one that is illegal at the time it was formed, meaning it violates a law or public policy. This can include contracts for illegal activities such as drug trafficking or bribery. Even if both parties consent to the contract, it is still considered illegal and unenforceable in court.

Question 19

In which of the following situations would there be an enforceable contract despite the lack of a written contract?
A) Jack agreed to build a garage for Sam after he finished the remainder of his 2-year army hitch (he has 14 months left).
B) Jack leases a storage facility for duration of his 2-year army hitch.
C) Contractor Joe agreed to build a $250 000 home for Sam on Sam's land, to be completed no later than 9 months from the date of signing.
D) Sam agreed to trade his vacation cottage with Joe in exchange for Joe's yacht.
E) Sam agreed to guarantee a loan for his friend Joe.

Accepted Answer

An oral contract for services that can be completed within one year is enforceable, as in the case of building a home within 9 months.

Question 20

Zlotnik incorporated a company shortly after graduation.The company bought a truck and a computer.Short of operating capital,the company,through its agent Zlotnik,borrowed $10 000 from the bank.In consideration for its loan,the bank took,in addition to the company's promise to pay the bank both principal and interest,a mortgage of its truck and computer.The company made its payment each month without incident.For reasons still unknown,the stock market took a tremendous fall,which caused the officer of the bank to call Zlotnik and ask him to guarantee the company's debt.The company was doing very well,so Zlotnik agreed to be guarantor of the debt.His oral assurances were sufficient for the bank officer.On these facts,which of the following is true?
A) Because Zlotnik's promise is a guarantee and not an indemnity, he automatically becomes the legal person primarily liable on the debt; the company becomes secondarily liable.
B) Zlotnik's promise to guarantee the debt is unenforceable because it is not supported by any consideration flowing from the bank to Zlotnik.
C) Zlotnik's promise to guarantee the debt is void because the guarantee itself is not in writing.
D) Zlotnik's promise to guarantee the debt is enforceable wholly on the grounds that the Statute of Frauds with its writing requirement has been repealed.
E) All guarantees and indemnities must be in writing and under seal to be binding.

Accepted Answer

Zlotnik's promise to guarantee the debt is unenforceable because there was no new consideration provided by the bank to Zlotnik for his promise to guarantee the company's debt.

Quiz 7: The Elements of a Contract capacity, Legality, and Intention

Which of the following agreements has to be in writing under the original Statute of Frauds in order to be enforceable?

In Ascent Financial Services Ltd.v.Blythman,the Court decided

In which of the following situations would the contract relating to land not be enforceable?

What does the decision in Bayview Credit Union Ltd.v.Daigle illustrate?

In Royal Bank of Canada v.Holoboff,the Bank sued Holoboff,a minor,who had sold his client card and personal identification number (PIN) to a third party who defrauded the bank.What was the result?

Which one of the following is required to be evidenced in writing under the Statute of Frauds or its equivalent?

A woman forged her husband's signature on dozens of cheques.In an attempt to protect her from prosecution,the husband signed a letter prepared by the Bank agreeing to assume all liability for the forged cheques.What would the Court find in relation to this agreement?

The case of Canadian Imperial Bank of Commerce v.Milhomens examined the effect of one party's insanity on a contract.What did the Court find?

Mr.Buyer,the plaintiff in the action,was attempting to enforce a contract in which the defendant,Mr.Seller agreed to sell to buyer his property,Blackacre,for $100 000.Which of the following,by itself,would be sufficient to allow Mr.Seller to get out of the contract?

Given the provisions of the Statute of Frauds,which of the following contracts should be evidenced in writing?

Which of the following best describes an illegal contract?

In which of the following situations would there be an enforceable contract despite the lack of a written contract?